How To Find A Balance Between Popularity And Profitability

-Balancing Stones-Take it from someone who knows, you can win the race to become popular but have no money to show for it. Over the past few months the Social Times has gone through one of the most challenging periods. The road for building a “digital media company” has been been filled with extreme peaks and valleys. The peaks have been incredible but the valleys have been absolutely painful, pushing me to the brink and challenging me to come up with creative ways to survive.

After hosting a successful conference last year I was absolutely exhausted and couldn’t immediately follow-up with a second one. The result was that 6 months later I was scrambling to find a way to support myself and while I was able to make it through the tough times, I’m realizing that finding a balance between popularity and profitability is extremely important.

Larger companies can experience even wilder peaks and valleys but effectively managing cash flow can help smooth out the overall experience. Unfortunately since I’ve never run a self-sustaining business before this one, I didn’t know any of the lessons that I’ve since learned. For me, the dilemma of popularity versus profitability arises when exploring the various types of content to create.

I’m almost done with a 70 page guide related to Facebook and business and I’m answering the question of whether or not to sell the guide immediately, offer it for free, or do something in between. Figuring out the answer has been a very challenging one. I’ve watched others like Brian Clark at Copyblogger, and Darren Rowse at Problogger both launch successful programs but each used a different strategy. Both have at least figured out a way to generate alternative revenue streams through their media companies, something that most large media companies are still struggling to discover.

The balance of popularity and profitability is one that faces all businesses in the digital economy. Whether you are a service provider or a product company, there’s always the question of whether you should spend more time getting traffic to your website or spend more time generating revenue. Most people would say that the answer is fairly obvious: focus on making money!

Unfortunately in a world where news can come from anywhere and a little extra effort can bring a lot more clients, things aren’t as clear. So here are a few tips that I’d suggest in focusing on profitability versus popularity:

  • Define a revenue stream early on – How do you make money? When I first started blogging I had no idea what my revenue stream would be. I soon made sponsors and event attendees my primary revenue streams. While it’s possible to have multiple revenue streams, it’s important to define one early on.
  • Pay yourself from the beginning – If you can’t pay yourself early on, you can’t quit your job. I can’t tell you how important this is. I’ve met many people that don’t pay themselves and when you aren’t getting paid for all your hard work, it distorts your perspective. If you are a self-made millionaire then congratulations but for the rest of us, paying yourself is extremely important to help you judge how much you should be charging for services/products/etc.
  • Set aside a specific amount of time for buzz building – It’s extremely easy to get caught up in blogging, Twitter, Facebook, FriendFeed, and every other social media channel. Don’t get stuck in this channel. I’ve paid the price for over investing in social media. While you can generate a lot of buzz, you can end up realizing that you didn’t bill enough people and suddenly end up in a bad situation. To avoid the issue of over-investing in social media/buzz building/popularity building/etc, set aside an amount of time each week to focus on these activities.
  • Invest in buzz early and don’t quit – There are two common things that people do: they build a lot of buzz and stop or they completely under invest in build buzz (e.g. marketing). The first issue results in a large initial client flow and then a slowing in the pipeline. It’s easy to over expand and then go bust in those instances. To avoid going bust, make sure that the investment is marketing is continuous and ongoing. The second issue (under investing in marketing) results in lack luster results and can cost more in the long-run. It’s like spending 5 dollars a day on Google ads and experiencing no results because your campaign ends at 10 AM every morning. To get around these issues, make your allocation for marketing a consistent one. It’s similar to setting aside the same amount of time each week as mentioned in the last item.

If you have any other tips, please add them in the comments as I am still in the process (and sure many others are) of trying to find the right balance between generating buzz and generating revenue.